This invention relates generally to financial services and products, and more particularly to funds that are managed with a goal of achieving a predefined dollar amount at a future date, while providing a potential upside return.
Various investment options exist for defined contribution plans and other retirement accounts. Lifecycle funds, for example, follow a preset allocation path over a participants' lifetime as they approach a predefined target or horizon date. This preset allocation is typically based on a model of expected labor income and investment risk and return. The most common goal for these funds is maximization of investment efficiency (information ratio).
Existing investment products do not follow an investment strategy that attempts to achieve a predefined dollar amount at a specified future date. Thus, while the existing market provides different products for investors with different risk and reward trade-offs, there is a lack of products for investors who desire to target a specific outcome, rather than attempt to maximize potential and take the risks associated therewith. Such an investment product may be desirable in retirement accounts as well as other types of accounts (e.g., college savings accounts), where the investor can reasonably determine a target value they wish the fund to acquire, and where achieving that target is likely to be more important to the investor than maximizing investment potential.